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Will HARP 3 be a charm?

By Polyana da Costa ·
Friday, May 25, 2012
Posted: 12 pm ET

Will the third try be a charm for HARP?  Industry analysts seem to think so. And so does the government.

The first version of the Home Affordable Program failed to help homeowners who were underwater. The revised version, HARP 2.0, helped some borrowers. But there's no way it will help the millions of homeowners eligible for the program. So what do we need? HARP 3.0.

That's in short what housing experts told the Senate Banking Committee Thursday during a hearing on a bill designed to help borrowers refinance their mortgages. The bill, called the Responsible Refinancing Act of 2012, would remove additional barriers that still prevent underwater borrowers from refinancing and reducing the interest rate on their mortgages.

"HARP 2 still is not designed to help enough underwater homeowners," Quicken Loans CEO Bill Emerson said during the hearing, according to a written testimony. "The current proposed legislation would enable every loan originator in the country the opportunity to help the four million HARP eligible borrowers."

Why? Simply put, because this measure would eliminate the risk of lawsuits for lenders that refinance an underwater mortgage. HARP 2.0 eliminated that risk for lenders that refinance mortgages they already service. But not for lenders that refinance a mortgage serviced by another bank.

In other words, if your mortgage is serviced by one of the large banks participating in HARP, you shouldn't have a problem refinancing because that lender has been given the guarantee that it will not be sued for giving you that refinance, even if you end up defaulting later.

But if your bank doesn’t want to do HARP, you may have trouble refinancing. There are exceptions.

Some lenders are taking the risk and refinancing mortgages through HARP 2.0. But most won't refinance a loan through HARP if it's serviced by another lender.

A mortgage servicer is not required to verify the borrower's income or assets when refinancing a loan through HARP 2.0 if the servicer already services that loan, Emerson explained to the committee.

"The same servicer only needs to verify that the borrower has a viable source of income," he says.

But the new lender must verify everything. And if it makes even a minor error, that lender could be forced to buy that loan back in the future. That notion deters most lenders.

Mark Zandi, chief economist for Moody's Analytics told the committee that these HARP changes and other measures in the bill would help millions of borrowers. The bill would eliminate upfront fees and appraisal costs related to refinancing a HARP loan.

If the legislation is implemented by the fourth quarter of this year and mortgage rates remain near 4 percent through the end of 2013, more than 4 million borrowers would be able to refinance their loans, Zandi says.

What do you think? Will HARP 3 be approved? Will it help?

What do I think? I don't understand why it wasn’t done right the first time and I'm not so sure this bill will pass. But I'm for anything that helps borrowers.

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June 02, 2012 at 12:25 am

I reached out to BOA (our lender) a couple of months ago to refinance. I was amazed at how quickly I received a response... yet equally disappointed with the new interest rate they offered for the refi. Our current int rate is 6.5 and they offered 5.3 (30 yr) and 4.9 (20 yr). How can that be when refinance rates are in the low 3% range for our area?
I would LOVE to know why my current lender is quoting me a rate so much higher than current refi rates advertised everywhere (including this site).

Gene Neal
May 31, 2012 at 5:52 pm

From reading the comments below it's sad to see how many people are not informed with the truth. If you have any Mortgage related questions regarding Harp 2.0 please contact me.

May 29, 2012 at 10:10 am

LTV does matter, I am at 151%, BOA servicer of loan just kept denying over the phone. Went to a smaller bank, and now Freddie Mac is denying. LTV is not supposed to matter, but Freddie still wants to protect its investors! I am also being told that is Freddie Mac that tells the lender what interest rate I should have . Freddie "recommended" that I get a co-signer , and then I could get 4.625% for 30 yrs, for $5000. bucks!. That isn't great. Freddie, Fannie and the Big Banks are legally robbing their customers in the guise of help, and our government is giving them a pat on the back! Those of us labeled responsible are stuck now, if you wanna walk you can be sure the IRS will be after you you, if you are responsible it apparently translates as "RICH".

May 28, 2012 at 6:12 pm

Have tried and tried to get help but are told by the company that we pay our mortgage to that we cannot get help because we do not have a Fannie Mae or Freddie Mac loan. We cannot find out who owns our loan, there has to be someone out there to help us. I guess the next step will be try and do a short sale. We have always in 39 years paid our mortgage payment wouldn't you think that would count for something? Not with our mortgage company which we did not choose they choose us.

May 28, 2012 at 6:04 pm

My loan is currently services by Nationstar. The offered me 4.5% interest rate BUT will charge me $6,100! For what I dont know, because they currently already service my loan! WellsFargo offered me 4.0% and would charge me only $3,300! BUT WellsFargo will not call me back after I received my Good Faith Estimate because they are only servicing their own loans.

This process is beyond unfair to those who are currently keeping the economy afloat and a big RIP-OFF by the Banks!

May 28, 2012 at 1:49 pm

Is it true a Freddie Mac loan can only be refinanced with the current lender and if so, is this issue being addressed in the HARP 3.0 program ? My current lender does not offer HARP.

May 28, 2012 at 11:29 am

Chase Bank just re-fied, ( closed April, 2012 ) my rental property under HARP. LTV did not matter as it is underwater, nor my income, other than proving that I have one.

May 27, 2012 at 11:20 am

Nesa, I see you like Kool-Aid. By all objective accounts, it is far too soon to tell whether HARP will be successful and whether the help it allegedly provides will actually be sufficient in the long term to prevent more foreclosures.

And it was Congress that passed HARP and its revisions.

Still, several years into this debacle, none of these programs deign to assist those homeowners who no longer live in their homes, but were forced to move out to find jobs and now rent them out, often at a loss. Not one of the government-sponsored programs addresses these individuals, who are comprising an increasing proportion of underwater-mortgage holders. All of these measures are Band-Aids, meant to curtail worsening foreclosures until after the election, and do absolutely nothing to address the issues underlying the economic downturn.

May 26, 2012 at 9:28 am

Harp 2 does guarantee a lower rate depending on the month you chose to refinance and depending how aggressive you are with the loan officer. Loan officers will start off high but if you do your homework, thanks to the internet, and with much infighting with the loan officer, you will get a low rate. I was offered a 3.65% interest rate in late May due to decreasing interest rate and I did not roll my closing cost (DOC Stamps etc.) into the loan thus allowing me to carry an APR of 3.65. This is a very good program and has helped many homeowners who are underwater and whose loan are owned by Fannie and MacDaddy. Thanks to President Obama, this was made possible.

May 25, 2012 at 8:01 pm

Although Harp 2.0 can give a lower interest rate on a refi, it doesn't guarantee the lowest rate. According to my lender, even though I have outstanding credit the LTV is so "risky" that they don't want to give me a lower interest rate than 4.5%. The value of my home is nearly 50% less using the Freddie Mac tool than the trulia estimate, which is itself pretty abysmal. So I am thinking the homeowners are still getting shafted and banking institutions are still making out.